Import tax on electronics halved

CRI, January 28, 2011

China Thursday halved the import tax on electronic products, including computers and digital cameras, in a move expected to boost the revenue of foreign giants such as Canon and Apple in the world's biggest consumer electronics market.

China cut the tax on computers, video cameras, digital cameras and other IT products from 20 percent to 10 percent, according to a statement on the Ministry of Finance's website.

The new rate means the tax on an iPad, a popular purchase with Chinese tourists returning from abroad, will be reduced from 1,000 yuan (US$151) to 500 yuan.

The move was seen as the latest response from China after President Hu Jintao's visit to the United States last week to wishes expressed about establishing closer bilateral ties and economic cooperation, industry insiders said.

The tax reduction for IT products will help overseas businesses expand their business in China and benefit companies such as Canon, the world's largest camera maker, iPad and iPhone developer Apple and global PC market leader Hewlett-Packard.

But it will also put pressure on Chinese IT firms such as Lenovo, China's No. 1 PC maker, analysts said.

In the third quarter, Lenovo's market share in China was 28.8 percent, more than double Dell's 10 percent and HP's 9.2 percent, the world's top two players, according to research company International Data Corp.

China is the world's biggest user of mobile phones and the Internet, which makes it a huge market for electronics.

Apple's revenue in China increased fourfold year on year in the three months to December 25, accounting for 10 percent of the US-based giant's global revenue, the company said last week.

"Of the BRIC countries (Brazil, Russia, India and China), we identified China as our top priority years ago. And we put enormous energy into China," Tim Cook, Apple's chief operating officer, said.